84004 Federal Register / Vol. 88, No. 230 / Friday, December 1, 2023 / Notices 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f). 

14 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 98562 

(Sept. 27, 2023), 88 FR 68240 (‘‘Notice’’). The 

Commission has received no comments on the 

proposal. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 98945, 

88 FR 81150 (Nov. 21, 2023). The Commission 

designated January 1, 2024, as the date by which 

the Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

disapprove, the proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

7See Notice, supra note 3. 

8See id. at 68250. Franklin Holdings, LLC 

(‘‘Sponsor’’) is the sponsor of the Fund. See id. at 

68241. 

9See id. at 68249. In seeking to achieve its 

investment objective, the Fund will hold bitcoin 

and may hold cash or cash equivalents. Coinbase 

Custody Trust Company, LLC will be responsible 

for custody of the Fund’s bitcoin holdings and Bank 

of New York Mellon will be the custodian for the 

Fund’s cash holdings, if any. See id. at 68241, 

68250. 

10See id. at 68250. 

11See id. at 68251. 

12See id. 

13See id. at 68249–50, 68251. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 12 and paragraph (f) of Rule 

19b–4 13 thereunder. At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CBOE–2023–061 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–CBOE–2023–061. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–CBOE–2023–061 and should be 

submitted on or before December 22, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–26492 Filed 11–30–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99030; File No. SR– 

CboeBZX–2023–072] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove a Proposed 

Rule Change To List and Trade Shares 

of the Franklin Bitcoin ETF Under BZX 

Rule 14.11(e)(4), Commodity-Based 

Trust Shares 

November 28, 2023. 

On September 26, 2023, Cboe BZX 

Exchange, Inc. (‘‘BZX’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to list and trade shares 

(‘‘Shares’’) of the Franklin Bitcoin ETF 

(‘‘Fund’’) under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares. The 

proposed rule change was published for 

comment in the Federal Register on 

October 3, 2023.3

On November 15, 2023, pursuant to 

Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.5 This order 

institutes proceedings under Section 

19(b)(2)(B) of the Act 6 to determine 

whether to approve or disapprove the 

proposed rule change. 

I. Summary of the Proposal 

As described in more detail in the 

Notice,7 the Exchange proposes to list 

and trade the Shares of the Fund, a 

series of the Franklin Templeton Digital 

Holdings Trust (‘‘Trust’’), under BZX 

Rule 14.11(e)(4), which governs the 

listing and trading of Commodity-Based 

Trust Shares on the Exchange. 

The investment objective of the Fund 

is to generally reflect the performance of 

the price of bitcoin before payment of 

the Fund’s expenses.8 The Fund’s assets 

will consist of bitcoin held by the 

Fund’s bitcoin custodian on behalf of 

the Fund and cash holdings, if any, held 

by the Fund’s cash custodian.9 The 

Fund will value its Shares daily based 

on the value of bitcoin as reflected by 

the CME CF Bitcoin Reference Rate 

(‘‘Reference Rate’’).10 The administrator 

for the Fund will determine the net 

asset value (‘‘NAV’’) of the Fund on 

each day that the Exchange is open for 

regular trading, as promptly as 

practicable after 4:00 p.m. ET.11 In 

determining the Fund’s NAV, the 

administrator for the Fund will value 

the bitcoin held by the Fund based on 

the price set by the Reference Rate as of 

4:00 p.m. ET.12 When the Fund sells or 

redeems its Shares, it will do so in ‘‘inkind’’ transactions with authorized 

participants in large blocks of Shares.13


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Federal Register / Vol. 88, No. 230 / Friday, December 1, 2023 / Notices 84005 

14 15 U.S.C. 78s(b)(2)(B). 

15 Id. 

16 15 U.S.C. 78f(b)(5). 

17See Notice, 88 FR at 68246–48. 

18See id. at 68248. 

19See id. at 68253. 

20See id. 

21See id. at 68248 n.52. 

22See id. 

23See id. at 68253. 

24See id. at 68249. 

25See id. The Exchange states that ‘‘[t]his means 

that the Exchange expects to receive market data for 

orders and trades from Coinbase, which it will 

utilize in surveillance of the trading of the Shares.’’ 

Id. 

26See id. 

27See, e.g., Notice of Filing of Amendment No. 

3 to, and Order Instituting Proceedings to 

Determine Whether to Approve or Disapprove, a 

Proposed Rule Change to List and Trade Shares of 

the ARK 21Shares Bitcoin ETF under BZX Rule 

14.11(e)(4), Commodity-Based Trust Shares, 

Securities Exchange Act Release No. 98112 (Aug. 

11, 2023), 88 FR 55743 (Aug. 16, 2023) (including 

data from sponsor 21Shares US LLC that purports 

to show correlations of returns across the two-year 

period from January 20, 2021, to February 1, 2023, 

of no less than 92% among certain spot bitcoin 

platforms and between the CME bitcoin futures 

market and such spot bitcoin platforms on an 

hourly basis, and no less than 78% on a minutely 

basis). 

28Section 19(b)(2) of the Act, as amended by the 

Securities Acts Amendments of 1975, Public Law 

94–29 (June 4, 1975), grants the Commission 

flexibility to determine what type of proceeding— 

either oral or notice and opportunity for written 

Continued 

II. Proceedings To Determine Whether 

To Approve or Disapprove SR– 

CboeBZX–2023–072 and Grounds for 

Disapproval Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 14 to determine 

whether the proposed rule change 

should be approved or disapproved. 

Institution of proceedings is appropriate 

at this time in view of the legal and 

policy issues raised by the proposed 

rule change, as discussed below. 

Institution of proceedings does not 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, as 

described below, the Commission seeks 

and encourages interested persons to 

provide comments on the proposed rule 

change. 

Pursuant to Section 19(b)(2)(B) of the 

Act,15 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of the proposed rule 

change’s consistency with Section 

6(b)(5) of the Act, which requires, 

among other things, that the rules of a 

national securities exchange be 

‘‘designed to prevent fraudulent and 

manipulative acts and practices’’ and 

‘‘to protect investors and the public 

interest.’’ 16

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, which are set forth in the 

Notice, in addition to any other 

comments they may wish to submit 

about the proposed rule change. In 

particular, the Commission seeks 

comment on the following questions 

and asks commenters to submit data 

where appropriate to support their 

views: 

1. What are commenters’ views on 

whether the proposed Fund and Shares 

would be susceptible to manipulation? 

What are commenters’ views generally 

on whether the Exchange’s proposal is 

designed to prevent fraudulent and 

manipulative acts and practices? What 

are commenters’ views generally with 

respect to the liquidity and transparency 

of the bitcoin markets and the bitcoin 

markets’ susceptibility to manipulation? 

2. Based on data and analysis 

provided and the academic research 

cited by the Exchange,17 do commenters 

agree with the Exchange that the 

Chicago Mercantile Exchange, Inc. 

(‘‘CME’’), on which CME bitcoin futures 

trade, represents a regulated market of 

significant size related to spot bitcoin? 18

What are commenters’ views on 

whether there is a reasonable likelihood 

that a person attempting to manipulate 

the Shares would also have to trade on 

the CME to manipulate the Shares? 19 Do 

commenters agree with the Exchange 

that trading in the Shares would not be 

the predominant influence on prices in 

the CME bitcoin futures market? 20

3. The Exchange states that bitcoin is 

resistant to price manipulation and that 

other means to prevent fraudulent and 

manipulative acts and practices ‘‘exist 

to justify dispensing with the requisite 

surveillance sharing agreement’’ with a 

regulated market of significant size 

related to spot bitcoin.21 In support, the 

Exchange states, among other things, 

that the geographically diverse and 

continuous nature of bitcoin trading 

make it difficult and prohibitively costly 

to manipulate the price of bitcoin, and 

that the fragmentation across bitcoin 

platforms, the relatively slow speed of 

transactions, and the capital necessary 

to maintain a significant presence on 

each trading platform make 

manipulation of bitcoin prices through 

continuous trading activity 

challenging.22 The Exchange also states 

that offering only in-kind creations and 

redemptions provides ‘‘unique 

protections against potential attempts to 

manipulate the price of the Shares’’ and 

that the price the Sponsor uses to value 

the Fund’s bitcoin ‘‘is not particularly 

important.’’ 23 Do commenters agree 

with the Exchange’s statements 

regarding the bitcoin market’s resistance 

to price manipulation? 

4. The Exchange also states that it will 

execute a surveillance-sharing 

agreement with Coinbase, Inc. 

(‘‘Coinbase’’) that is intended to 

supplement the Exchange’s market 

surveillance program.24 According to 

the Exchange, the agreement is 

‘‘expected to have the hallmarks of a 

surveillance-sharing agreement between 

two members of the [Intermarket 

Surveillance Group], which would give 

the Exchange supplemental access to 

data regarding spot [b]itcoin trades on 

Coinbase where the Exchange 

determines it is necessary as part of its 

surveillance program for the Shares.’’ 25

Based on the description of the 

surveillance-sharing agreement as 

provided by the Exchange, what are 

commenters’ views of such an 

agreement if finalized and executed? Do 

commenters agree with the Exchange 

that such an agreement with Coinbase 

would be ‘‘helpful in detecting, 

investigating, and deterring fraud and 

market manipulation in the Shares’’? 26

5. Some sponsors of proposed spot 

bitcoin exchange-traded products have 

also provided data regarding the 

correlation between certain bitcoin spot 

markets and the CME bitcoin futures 

market.27 What are commenters’ views 

on the correlation between the bitcoin 

spot market and the CME bitcoin futures 

market? What are commenters’ views on 

the extent to which that correlation 

provides evidence that the CME bitcoin 

futures market is ‘‘significant’’ related to 

spot bitcoin? 

III. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposal is consistent with Section 

6(b)(5) or any other provision of the Act, 

and the rules and regulations 

thereunder. Although there do not 

appear to be any issues relevant to 

approval or disapproval that would be 

facilitated by an oral presentation of 

views, data, and arguments, the 

Commission will consider, pursuant to 

Rule 19b–4, any request for an 

opportunity to make an oral 

presentation.28


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84006 Federal Register / Vol. 88, No. 230 / Friday, December 1, 2023 / Notices 

comments—is appropriate for consideration of a 

particular proposal by a self-regulatory 

organization. See Securities Acts Amendments of 

1975, Senate Comm. on Banking, Housing & Urban 

Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 

(1975). 29 17 CFR 200.30–3(a)(57). 

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposed rule change should be 

approved or disapproved by December 

22, 2023. Any person who wishes to file 

a rebuttal to any other person’s 

submission must file that rebuttal by 

January 5, 2024. 

Comments may be submitted by any 

of the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CboeBZX–2023–072 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–CboeBZX–2023–072. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–CboeBZX–2023–072 and should be 

submitted on or before December 22, 

2023. Rebuttal comments should be 

submitted by January 5, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.29

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–26488 Filed 11–30–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–813, OMB Control No. 

3235–0765] 

Submission for OMB Review; 

Comment Request; Extension: Rule 

498A 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(‘‘Paperwork Reduction Act’’) (44 U.S.C. 

3501–3520), the Securities and 

Exchange Commission (the 

‘‘Commission’’) has submitted to the 

Office of Management and Budget 

(‘‘OMB’’) a request for extension of the 

previously approved collection of 

information discussed below. 

Rule 498A under the Securities Act 

permits a person to satisfy its 

prospectus delivery obligations under 

section 5(b)(2) of the Securities Act for 

a contract by: (1) sending or giving to 

new investors key information 

contained in a variable contract 

statutory prospectus in the form of an 

initial summary prospectus; (2) sending 

or giving to existing investors each year 

a brief description of certain changes to 

the contract, and a subset of the 

information in the initial summary 

prospectus, in the form of an updating 

summary prospectus; and (3) providing 

the statutory prospectus and other 

materials online. Rule 498A considers a 

person to have met its prospectus 

delivery obligations for any portfolio 

companies associated with a variable 

contract if the portfolio company 

prospectuses are posted online. Under 

the rule, a registrant (or the financial 

intermediary distributing the variable 

contract) relying on the rule must send 

the variable contract statutory 

prospectus (that statutory prospectus 

must be filed as part of registration 

statement on Form N–3, N–4, or N–6, as 

applicable) and other materials to an 

investor in paper or electronic format 

upon request. 

Based on an analysis of fund filings, 

we estimate that 82% of variable 

contracts that filed annual updates to 

their registration statements use at least 

one summary prospectus under rule 

498A. In the aggregate, the Commission 

staff estimates the total annual hour 

burden to comply with rule 498A to be 

7,634 hours, at an internal time cost 

equivalent of $2,337,471, and a total 

annual external cost burden of 

$9,094,866. 

The estimate of average burden hours 

is made solely for the purposes of the 

Paperwork Reduction Act. The estimate 

is based on communications with 

industry representatives, and is not 

derived from a comprehensive or even 

a representative survey or study. 

Responses will not be kept 

confidential. An agency may not 

conduct or sponsor, and a person is not 

required to respond to, a collection of 

information unless it displays a 

currently valid OMB control number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Written comments and 

recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice by January 2, 2024 to (i) 

MBX.OMB.OIRA.SEC_desk_officer@

omb.eop.gov and (ii) David Bottom, 

Director/Chief Information Officer, 

Securities and Exchange Commission, c/ 

o John Pezzullo, 100 F Street NE, 

Washington, DC 20549, or by sending an 

email to: PRA_Mailbox@sec.gov. 

Dated: November 27, 2023. 

Christina Z. Milnor, 

Assistant Secretary. 

[FR Doc. 2023–26405 Filed 11–30–23; 8:45 am] 

BILLING CODE 8011–01–P 


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